A “blue wave” of tax hikes on the wealthy is sweeping through states like Virginia, Washington, and Rhode Island, following California’s lead. With rising populism and economic disparities, blue states are targeting high earners to fund growing priorities, while red states cut income taxes for competitiveness.

In Massachusetts, a 4% surtax on income over $1 million generated nearly $3 billion, disproving fears of mass wealth flight due to higher taxes. The latest tax hikes focus solely on millionaires and billionaires, marking a shift from broader progressive taxation efforts.

California’s proposed Billionaire Tax Act would levy a one-time 5% tax on assets of residents worth $1 billion or more, retroactively effective in 2026. Some billionaires have already left the state, like Google’s Larry Page and AI expert David Sacks, citing concerns of asset seizure.

Virginia is considering a 10% tax bracket for those earning over $1 million, while West Virginia and North Carolina are reducing income taxes. Lawmakers in blue states are pushing for increased taxes on high earners to fund essential services, following the Trump tax bill.

Washington state is proposing a 9.9% tax on those making over $1 million, building on a 7% capital gains tax from 2022. In Michigan, a proposed 9.25% top rate for high earners aims to generate $1.7 billion for education, while Rhode Island eyes a 3% surtax on incomes over $1 million.

New York City’s newly elected mayor is pressuring Gov. Hochul to raise taxes on the wealthy to fill a $12 billion budget hole. Experts warn that the growing trend of higher taxes in blue states may drive business owners and top earners to relocate to lower-tax states like Texas.

Read more at CNBC: Democratic states seek to hike taxes on the wealthy